DWP axes Siemens contract as costs soar

The Department for Work and Pensions has ended a contract with German engineering giant Siemens.

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The Department for Work and Pensions has ended a contract with German engineering giant Siemens.

The department confirmed that officials last week axed Siemens’ contract to develop a new central payment system that would oversee the £110 billion in payments made to 17m people each year, but refused to give a reason.

The contract was signed in April 2004 was originally planned to be completed October 2006 at costs of £90 million, according to a parliament written answer from 5 March.

But ministers were forced to state that the expected completion date had now slipped to December 2010 and the estimated costs were now estimated at £153 million. Last year the department also revealed that it spent £5 million on consultancy costs with Deloitte over three years on the project.

The DWP said in a statement that it had “terminated its contract in relation to the Central Payment System programme with Siemens IT Solutions and Services”.

Siemens, for its part said, “The contract is at an end and for contractual reasons Siemens is unable to comment further.”

The central payment engine and accounts payable system was to improve accounting for benefit and pension payments, tackle fraud and error, reduce risks of service failure, and improve information sharing for customer service.